If you’ve been rejected for a home loan because your credit and income wouldn’t qualify, consider purchasing a home together with a family member or roommates in the same situation. With your combined financial resources, you’ll have a higher chance of being approved by a lender. If you and your roommates decide to cobuy a property together, at least you’ll minimize the typical adjustment period associated with a new co-owner.
One scenario to consider is purchasing a property with individual units like a duplex or triplex. You’ll enjoy some of the same benefits as your own home such as a private entrance, separate kitchen, and more. While this arrangement may seem advantageous, you’ll still have to address the issues of joint responsibility regarding ownership and monthly maintenance expenses for the land, roof, and other common areas.
Another less costly alternative is to purchase a single dwelling and share the space together. One major problem with this arrangement is you would have to sacrifice your own private space. If you and the co-owner still decide to enter into this kind of arrangement, try buying a home with a layout that allows you separate private areas.
Before you hastily jump into a joint arrangement, you’ll have to discuss major financial issues and other issues particular to a joint ownership. One of the biggest issues will be concerning splitting the down payment and monthly expenses. Will this be an even split or a percentage split depending on the amount of down payment put in, the size of bedroom occupied, or some other factors. Be aware your tax benefits will be dependent on how you split ownership.
Another major concern is who inherits the property if one joint owner dies? Will it pass to the other owner or to the deceased heirs? What about if one owner wants to move out-can he or she rent their part of the home, sell it, or force the other owners to sell or buy their portion out?
You need to get some good legal advice concerning these issues because how you and the other joint owners list the ownership on the deed legally determines what happens in these circumstances. Common ways to hold title on a property can include tenants in common or joint tenants with right of survivorship. It’s best to consult with a local attorney to determine which ownership is best for you.
Other issues you should agree on include what length of time everyone plans to live in the house (also what options are available when a co-owner decides to marry or when an elderly parent needs constant care); what course of action should be taken when a co-owner becomes unemployed; what style to furnish the house; and house rules (such as cleanup, household supplies, sound level of music, and overnight guests).
Buying a home jointly with another party is a huge commitment and it’s vital you choose the right person to partner with. Be sure to discuss all issues with your future co-owner and put the agreement in writing with the help of an attorney.
Want to find out more about buying a home in Orange County, CA? Check out these Tustin realtors and Yorba Linda Realtors to help you find one!
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